BOARDROOM pay continues to hog the headlines, with Marks & Spencer becoming the latest big British company to feel the heat of shareholder rebellion. Let's say three cheers to this mood of defiance.
However, the agm generated more heat than light. Fewer than 10 per cent opposed the 15 million pay package used to lure Marc Bolland from supermarket chain Morrisons. Even a majority vote against would have had no legal authority to force him to hand back his money. Such rituals are usually aimed at embarrassing directors and changing future policy rather than getting remuneration packages withdrawn.
But even their effectiveness at forcing a change of policy is open to question as more huge pay awards this year suggest that, far from being held back by public outrage, directors' salaries are stepping up a gear.
Bolland's massive pay deal was announced at the same time as ITV revealed that its new boss, Adam Crozier, may earn 17m by 2015 if he hits performance targets. Ladbrokes' new boss Richard Glynn is sitting on a pay plan which could generate 20m over five years.
At least it is encouraging to see shareholders getting more involved in boardroom policies, and they are likely to become more active and more effective from next year when annual re-elections for directors are introduced. Nothing will focus the minds of an executive more on pursuing acceptable practices than knowing he has to face the shareholders each year in order to keep his job.
It is five years since a company boss was humiliated into handing money back due to a shareholder revolt. In 2005, Lord Hollick of media group UBM handed back a 250,000 bonus. Among recent votes, supermarket chain Tesco came closest to losing when it suffered a backlash from 47 per cent of shareholders who voted against or abstained.
Companies argue repetitively that they must pay the going rate, but everyone else pays the price when it all goes wrong and paying what the market demands does not guarantee success.
Shareholder activism is now regularly grabbing attention but is it actually on the increase?
Figures from Pirc, the investor research group, show that in 2007 an average of 4 per cent of votes were against remuneration policies, actually falling to 3 per cent in 2008 before a surge to 17.5 per cent last year, a result that was heavily skewed by the opposition to bankers' pay. The first quarter of this year shows a return to previous levels, though that period includes few annual meetings where the votes take place. It is thought this year's average will show a slight rise on the 2007-8 figures.
The root cause of the opposition is the disconnection between pay and share price performance.
While Britain's top bosses have seen their pay packets rise fourfold in ten years, the FTSE-100 has fallen 16 per cent over the same period.
High rates of pay have also become front page headlines, embarrassing to those who vote them through and see no equivalent return in shareholder value or, worse still, watch with horror as overpaid executives lead their companies into decline.
Royal Bank of Scotland's generous remuneration policy was among the most blatant examples of the divergence of pay and performance. While the directors were paid millions, the company was heading for the rocks.
Shareholders are now seeing what happens when they give company directors too much freedom. But it is not only the highly paid directors of failing companies that are in their sights. Those now getting it in the neck are heading some of Britain's most successful businesses. Xstrata, Tesco, Burberry, Sainsbury's, WPP and now M&S are market leaders with rising profits.
Pirc says it objects in these cases purely because it regards the incentive and reward to be out of balance. In other words, it just thinks they are being paid too much.
Overall, it objects to remuneration policies in a third of all UK listed companies.
Shareholders were among those criticised for lacking vigilance during the banking crisis, and rightly so. So adopting a more active role will be a valuable contribution to good corporate governance..